Georgetown Rail Equipment Co v Tetra Tech EBA Inc 2020 FC 64 Fothergill J on remand from
2019 FCA 203 DawsonJA: Pelletier, Webb JJA rev’g 2018 FC 70 Fothergill J
2,572,082 / 2,766,249
This case is the exception that proves the rule that the presumption of validity rarely plays a
significant role in validity determinations.
At trial in Georgetown Rail v Tetra Tech Fothergill J held that Georgetown’s 082 and 249
patents were valid and infringed by Tetra Tech (see here). The FCA reversed, on the basis that
Fothergill J had “erred in law by failing to consider and analyze how the skilled worker would
have applied the common general knowledge to the prior art” [FCA 13] (and see here). The FCA
consequently held the 082 patent and several asserted claims of the 249 patent to be invalid for
obviousness [FCA 134]. The issue of validity of the remaining claims of the 249 patent was
remitted to Fothergill J.
On remand, Fothergill J found the two broadest claims (Claim 1 and 12), to be invalid for
obviousness, but there was insufficient relevant evidence to allow him to conclude that the other
remanded claims were obvious [11], [51]. This is apparently because the obviousness of these
claims was not a major issue at trial, and “neither Tetra nor Georgetown devoted much time or
effort at trial” to elucidating the inventive concept of those claims [47]. “Applying the
presumption of validity and the burden of proof,” Fothergill J therefore held that Tetra had not
established that the remanded claims were invalid [57].
A granted patent is presumed to be valid, but the presumption is very weak, and is therefore
rarely determinative. The presumption of validity was determinative in this case only because of
the unusual circumstances surrounding the issue of obviousness for these particular claims.
Friday, January 31, 2020
Wednesday, January 29, 2020
Does a Direct Infringer Have a Cause of Action Against its Inducer?
McCain Foods Limited v JR Simplot Company 2019 FC 1635 McVeigh J
This appeal of Aylen J’s decision granting Simplot leave to file a third party claim and file related amendments to its statement of defence raises a couple of novel legal issues. One of the amendments to the statement of defence seems to be premised on a novel extension of the law of implied licence: see the discussion below under Amendments: Licence (2). And McVeigh J also held that it is arguable that in an inducement scenario, the direct infringer has a cause of action against the indirect infringer that induced it to infringe. This implies that in an inducement scenario, the direct infringer can effectively force the patentee into an action against the indirect infringer: see the discussion below under Third Party Claim: Induced infringement. However, McVeigh J upheld Aylen J’s decision on these points on the deferential basis that there was no palpable and overriding error, so this decision does not establish any point of law. If this litigation proceeds to trial, these will be issues to watch.
2,412,841 / Process for Treating Vegetables and Fruit Before Cooking
This appeal of Aylen J’s decision granting Simplot leave to file a third party claim and file related amendments to its statement of defence raises a couple of novel legal issues. One of the amendments to the statement of defence seems to be premised on a novel extension of the law of implied licence: see the discussion below under Amendments: Licence (2). And McVeigh J also held that it is arguable that in an inducement scenario, the direct infringer has a cause of action against the indirect infringer that induced it to infringe. This implies that in an inducement scenario, the direct infringer can effectively force the patentee into an action against the indirect infringer: see the discussion below under Third Party Claim: Induced infringement. However, McVeigh J upheld Aylen J’s decision on these points on the deferential basis that there was no palpable and overriding error, so this decision does not establish any point of law. If this litigation proceeds to trial, these will be issues to watch.
Monday, January 27, 2020
Overbreadth Sole Basis for Holding Claims Invalid
Seedlings Life Science Ventures, LLC v Pfizer Canada ULC 2020 FC 1 Grammond J
2,486,935 / Auto-Injection of Medication
In Seedlings Grammond J held four claims of the 935 patent to be invalid on the sole ground of overbreadth. In my draft paper on Overbreadth in Canadian Patent Law, I argued that overbreadth is almost always redundant, in the sense that the same facts and analysis that support overbreadth also support a finding of invalidity on some other ground as well. Overbreadth has been applied as a truly independent ground of invalidity in just four cases. The first was Amfac (1986), 12 CPR (3d) 193 (FCA), in which the FCA upheld a decision striking down the key claim in the patent on the sole basis of overbreadth. The doctrine then lay unused for over thirty years, until last year, when it was invoked in two FC decisions, Servier v Apotex 2019 FC 616 (here) and Aux Sable 2019 FC 581 (here). In those decisions, while overbreadth was applied as an independent doctrine, it was not the sole basis for striking down the claims at issue. Seedlings is the third recent case to apply overbreadth as an independent doctrine, and in this case four claims were held invalid solely on that basis.
The SCC decision in BVD [1937] SCR 221 provides a good example of the typical use of overbreadth. The patent at issue disclosed a method of making semi-permeable fabrics using thermoplastic fibres woven into a yarn with cotton fibres, then fusing the fibres with heat and pressure. The use of thermoplastic in the form of a yarn was “the very essence of the invention” (228, 230). The claims, however, specified a fabric which “contains” a thermoplastic with no mention that it was in the form of yarns. The Court therefore held that the prior art Dreyfus patent, which disclosed a similar process using thermoplastics in the form of sheets rather than yarn, “constitutes a complete anticipation of the claims of the respondent,” unless those claims could be limited to a thermoplastic yarn (232-33). The Court held that the claims could not be so limited, and consequently, “[t]he claims in fact go far beyond the invention. Upon that ground the patent is invalid” (237). Thus the claims were overbroad because they had omitted an essential element, namely that the thermoplastic should be woven into the yarn. As the SCC explained, the situation was much the same as that in Erickson’s Patent:
It is because the claim lacked novelty that, “accordingly,” it was too wide.
2,486,935 / Auto-Injection of Medication
In Seedlings Grammond J held four claims of the 935 patent to be invalid on the sole ground of overbreadth. In my draft paper on Overbreadth in Canadian Patent Law, I argued that overbreadth is almost always redundant, in the sense that the same facts and analysis that support overbreadth also support a finding of invalidity on some other ground as well. Overbreadth has been applied as a truly independent ground of invalidity in just four cases. The first was Amfac (1986), 12 CPR (3d) 193 (FCA), in which the FCA upheld a decision striking down the key claim in the patent on the sole basis of overbreadth. The doctrine then lay unused for over thirty years, until last year, when it was invoked in two FC decisions, Servier v Apotex 2019 FC 616 (here) and Aux Sable 2019 FC 581 (here). In those decisions, while overbreadth was applied as an independent doctrine, it was not the sole basis for striking down the claims at issue. Seedlings is the third recent case to apply overbreadth as an independent doctrine, and in this case four claims were held invalid solely on that basis.
The SCC decision in BVD [1937] SCR 221 provides a good example of the typical use of overbreadth. The patent at issue disclosed a method of making semi-permeable fabrics using thermoplastic fibres woven into a yarn with cotton fibres, then fusing the fibres with heat and pressure. The use of thermoplastic in the form of a yarn was “the very essence of the invention” (228, 230). The claims, however, specified a fabric which “contains” a thermoplastic with no mention that it was in the form of yarns. The Court therefore held that the prior art Dreyfus patent, which disclosed a similar process using thermoplastics in the form of sheets rather than yarn, “constitutes a complete anticipation of the claims of the respondent,” unless those claims could be limited to a thermoplastic yarn (232-33). The Court held that the claims could not be so limited, and consequently, “[t]he claims in fact go far beyond the invention. Upon that ground the patent is invalid” (237). Thus the claims were overbroad because they had omitted an essential element, namely that the thermoplastic should be woven into the yarn. As the SCC explained, the situation was much the same as that in Erickson’s Patent:
In Erickson’s Patent case [(1923) 40 RPC 477 (CA)], it was held that the patentee had
failed so to limit his first claim as to confine it to that which was the novelty (if any) of
the invention, and that accordingly the claim was so wide as to render the patent invalid.
It is because the claim lacked novelty that, “accordingly,” it was too wide.
Thursday, January 23, 2020
Can an Entity That Does Not Practise the Invention Be Entitled to an Accounting?
Seedlings Life Science Ventures, LLC v Pfizer Canada ULC 2020 FC 1 Grammond J
2,486,935 / Auto-Injection of Medication
The facts in Seedlings are summarized here along with a discussion of claim construction. Novelty and utility are discussed in Tuesday’s post. Despite his holding that the asserted claims were either invalid or not infringed, Grammond J went on to consider remedies, which had been fully argued. Yesterday’s post discusses a timing issue in the context of the reasonable royalty determination. Today’s post considers Grammond J’s suggestion that a patentee that does not itself practice the invention cannot be entitled to an accounting of profits.
Grammond J held that he would not have allowed Seedlings to elect an accounting of profits, largely because Seedlings only intended to licence its product, and would not have competed directly in the market, and so could not have suffered damages by way of lost sales. Grammod J stated:
The first sentence is well-established by the authorities cited by Grammond J, in particular Unilever v Proctor & Gamble (1993), 47 CPR (3d) 479 (FCTD), where the Muldoon J refused to allow an accounting, stating at 570-71:
The second sentence, which appears to say that the fact that the patentee does not practice the invention is not only a factor to be taken into account, but gives rise to a strict rule that the patentee “cannot be entitled” to an accounting, goes beyond what is established by any of the case law which he cited. So, Frac Shack 2017 FC 104 [283] and Human Care Canada 2018 FC 1302 [437], simply state that whether the patentee practiced the invention is one factor of several that can be considered. A strict rule of that nature is also difficult to reconcile with the well-established principle that an accounting, being equitable in nature, is discretionary. Grammond J recognized that an accounting is discretionary [251], and his remark at [252] should perhaps be interpreted as saying only that considerable weight will be given to this factor. Indeed, Grammond J went on to consider other factors, in particular that an accounting would have resulted in an award that would be “up to twenty times” greater than the reasonable royalty that would be assessed in damages [253], and that there was no evidence of wilful infringement [255].
It strikes me that a strict rule that a patentee that does not itself manufacture, distribute or sell the invention, cannot be entitled to an accounting, goes too far. Such an entity cannot of course get damages in the form of lost sales, so it’s remedy would be confined to a reasonable royalty, or potentially punitive damages. The difficulty with awarding only on a reasonable royalty is that it may not provide an adequate deterrent against infringement, as explained by Zinn J in Monsanto v Rivett 2009 FC 317:
In response to the deterrent argument, Grammond J pointed out that the court can award punitive damages for willful infringement [258]. The difficulty is that punitive damages are arguably an excessive deterrent, if routinely awarded, because the amount payable exceeds the benefit to the infringer from the use of the invention. Punitive damages make the infringer worse off than if it has never used the invention at all, and therefore have a chilling effect on legitimate forms of wilful infringement, such as when a party knows of the patent but believes it is probably invalid: see here. An accounting strikes a better balance, because the infringer is made worse off than if it had licenced, but not worse off than if it had never used the invention: see Rivett [22].
More broadly, a rule that a non-practising entity cannot be entitled to an accounting seems intuitively reasonable if the patentee is a patent assertion entity. But at the other end of the spectrum, consider a scenario in which a startup company with design expertise developed important new technology, and sought to licence it to a larger entity for commercialization. If the larger entity believed the patent to be valid and nonetheless copied the technology and began selling it, I don’t see why the patentee should be denied an accounting. In such a case the patentee might be entitled to punitive damages, as Grammond J pointed out, but I see no reason why it should be confined to punitive damages. Consider a similar scenario, except that the larger entity in believed, reasonably and in good faith, that the patent was invalid, but validity was ultimately upheld in close fought litigation. Why should the court have to choose between a reasonable royalty and punitive damages, rather than the middle ground of an accounting? The jurisprudence on the circumstances in which an accounting should be granted is still developing, but in my view, on the current state of the law and our understanding of the effects of the remedy, a discretionary multi-factorial approach, such as that set out by Phelan J in Varco 2013 FC 750 (see here), remain preferable to any strict rule.
2,486,935 / Auto-Injection of Medication
The facts in Seedlings are summarized here along with a discussion of claim construction. Novelty and utility are discussed in Tuesday’s post. Despite his holding that the asserted claims were either invalid or not infringed, Grammond J went on to consider remedies, which had been fully argued. Yesterday’s post discusses a timing issue in the context of the reasonable royalty determination. Today’s post considers Grammond J’s suggestion that a patentee that does not itself practice the invention cannot be entitled to an accounting of profits.
Grammond J held that he would not have allowed Seedlings to elect an accounting of profits, largely because Seedlings only intended to licence its product, and would not have competed directly in the market, and so could not have suffered damages by way of lost sales. Grammod J stated:
[252] The fact that the patentee does not practice the invention may also be taken into
account in deciding whether to award an accounting of profits. In other words, where the
patentee does not itself manufacture, distribute or sell the invention, it cannot be entitled
to the profits made by the infringer with respect to those activities. [citations omitted]
The first sentence is well-established by the authorities cited by Grammond J, in particular Unilever v Proctor & Gamble (1993), 47 CPR (3d) 479 (FCTD), where the Muldoon J refused to allow an accounting, stating at 570-71:
The two factors which mainly predicate the Court's discretion in this regard are the
plaintiff's brandishing their patent as a bargaining tool with P & G, and their never having
made or practised their patent's invention in Canada.
The second sentence, which appears to say that the fact that the patentee does not practice the invention is not only a factor to be taken into account, but gives rise to a strict rule that the patentee “cannot be entitled” to an accounting, goes beyond what is established by any of the case law which he cited. So, Frac Shack 2017 FC 104 [283] and Human Care Canada 2018 FC 1302 [437], simply state that whether the patentee practiced the invention is one factor of several that can be considered. A strict rule of that nature is also difficult to reconcile with the well-established principle that an accounting, being equitable in nature, is discretionary. Grammond J recognized that an accounting is discretionary [251], and his remark at [252] should perhaps be interpreted as saying only that considerable weight will be given to this factor. Indeed, Grammond J went on to consider other factors, in particular that an accounting would have resulted in an award that would be “up to twenty times” greater than the reasonable royalty that would be assessed in damages [253], and that there was no evidence of wilful infringement [255].
It strikes me that a strict rule that a patentee that does not itself manufacture, distribute or sell the invention, cannot be entitled to an accounting, goes too far. Such an entity cannot of course get damages in the form of lost sales, so it’s remedy would be confined to a reasonable royalty, or potentially punitive damages. The difficulty with awarding only on a reasonable royalty is that it may not provide an adequate deterrent against infringement, as explained by Zinn J in Monsanto v Rivett 2009 FC 317:
[23] At the level of principle, there is no deterrent from infringing the patent if what the
infringer is required to hand over is the sum he would otherwise have paid to Monsanto to
buy the seed and the licence. In fact, this would almost be counter to the purpose of
deterrence. It is much like saying, as the plaintiffs put it in their oral submission, “Catch
me if you can”. If caught, the defendant would be required to pay the sum he would have
paid to use the patent in any event. When not caught, he is left with a windfall.
In response to the deterrent argument, Grammond J pointed out that the court can award punitive damages for willful infringement [258]. The difficulty is that punitive damages are arguably an excessive deterrent, if routinely awarded, because the amount payable exceeds the benefit to the infringer from the use of the invention. Punitive damages make the infringer worse off than if it has never used the invention at all, and therefore have a chilling effect on legitimate forms of wilful infringement, such as when a party knows of the patent but believes it is probably invalid: see here. An accounting strikes a better balance, because the infringer is made worse off than if it had licenced, but not worse off than if it had never used the invention: see Rivett [22].
More broadly, a rule that a non-practising entity cannot be entitled to an accounting seems intuitively reasonable if the patentee is a patent assertion entity. But at the other end of the spectrum, consider a scenario in which a startup company with design expertise developed important new technology, and sought to licence it to a larger entity for commercialization. If the larger entity believed the patent to be valid and nonetheless copied the technology and began selling it, I don’t see why the patentee should be denied an accounting. In such a case the patentee might be entitled to punitive damages, as Grammond J pointed out, but I see no reason why it should be confined to punitive damages. Consider a similar scenario, except that the larger entity in believed, reasonably and in good faith, that the patent was invalid, but validity was ultimately upheld in close fought litigation. Why should the court have to choose between a reasonable royalty and punitive damages, rather than the middle ground of an accounting? The jurisprudence on the circumstances in which an accounting should be granted is still developing, but in my view, on the current state of the law and our understanding of the effects of the remedy, a discretionary multi-factorial approach, such as that set out by Phelan J in Varco 2013 FC 750 (see here), remain preferable to any strict rule.
Wednesday, January 22, 2020
Use of ex Post Information in Assessing a Reasonable Royalty
Seedlings Life Science Ventures, LLC v Pfizer Canada ULC 2020 FC 1 Grammond J
2,486,935 / Auto-Injection of Medication
The facts in Seedlings are summarized here along with a discussion of claim construction. Novelty and utility are discussed in yesterday’s post. Despite his holding that all the asserted claims were either invalid or not infringed, Grammond J went on to consider remedies, which had been fully argued. This post discusses a timing issue that arises in assessing a reasonable royalty. In particular, I will argue that the timing of the hypothetical negotiation construct used in assessing a reasonable royalty must reflect its purpose, which is to ensure proper compensation. This implies that there is no strict rule that the hypothetical negotiation takes place at the time of first infringement, nor is there a rule that ex post information cannot be used.
2,486,935 / Auto-Injection of Medication
The facts in Seedlings are summarized here along with a discussion of claim construction. Novelty and utility are discussed in yesterday’s post. Despite his holding that all the asserted claims were either invalid or not infringed, Grammond J went on to consider remedies, which had been fully argued. This post discusses a timing issue that arises in assessing a reasonable royalty. In particular, I will argue that the timing of the hypothetical negotiation construct used in assessing a reasonable royalty must reflect its purpose, which is to ensure proper compensation. This implies that there is no strict rule that the hypothetical negotiation takes place at the time of first infringement, nor is there a rule that ex post information cannot be used.
Tuesday, January 21, 2020
A Scintilla of Utility for a Mechanical Invention
Seedlings Life Science Ventures, LLC v Pfizer Canada ULC 2020 FC 1 Grammond J
2,486,935 / Auto-Injection of Medication
This post will discuss novelty, where, with respect, I feel Grammond J’s analysis went astray, as well as utility, where the decision provides a good illustration of what constitutes a “scintilla” of utility in the context of a mechanical invention. The facts are summarized here.
Novelty
Novelty requires enabling disclosure of the claimed invention in the prior art: Sanofi 2008 SCC 61 [24]-[28]. This is a two-step test, and both steps must be satisfied for the claim to be anticipated. To satisfy the first step, disclosure, “the matter relied upon as prior art must disclose subject-matter which, if performed, would necessarily result in an infringement of the patent”: Synthon [2005] UKHL 59 [22]; Sanofi [25]. At this stage “[n]o trial and error is permitted”: Sanofi [32]. Without disclosure, there is no anticipation. If the disclosure requirement is satisfied, the second stage, enablement, requires that “the ordinary skilled person would have been able to perform the invention which satisfies the requirement of disclosure”: Synthon [26]. The enablement requirement is satisfied so long as the skilled person could perform the invention without undue burden”: Synthon [29] The stages are distinct. This is important because, as the SCC noted in Sanofi [27], “While trial and error experimentation is permitted at the enablement stage, it is not at the disclosure stage.” Lord Hoffmann explained in Synthon:
While Grammond J acknowledged the two-step nature of the test for enablement [106]-[109], he did not address the steps separately when it came to assessing novelty on the facts, and, with respect, he appears to have made the error that Lord Hoffmann cautioned against.
For example, with respect to claim 57, Grammond J held as follows:
The difficulty is that this analysis skips directly to considering undue burden, which arises only at the enablement stage, without first considering whether the claimed invention was disclosed. If the “distinctive element” of claim 57 is not present in the prior art, then it is not disclosed, because: “At this stage, there is no room for trial and error or experimentation by the skilled person. He is simply reading the prior patent for the purposes of understanding it”: Sanofi [25]. The disclosure requirement is therefore not satisfied, and consequently, the claim is not anticipated, regardless of how the enablement question is answered. Moreover, the enablement question is aimed at the same prior art that is the subject of the disclosure inquiry: the question is whether “the ordinary skilled person would have been able to perform the invention which satisfies the requirement of disclosure.” The question on enablement is whether the skilled person would have been able to perform the prior art without undue burden, not whether the skilled person would have been able to perform the claimed invention without undue burden. Grammond J appears to have run the two stages together by asking whether the claimed invention might have been derived from the prior art without undue effort, without first asking whether it was disclosed. The analysis of claims 44 and 47 [125], [127], and claims 45 and 46 [131], appears to take the same approach.
Utility
Utility is assessed at the Canadian filing date. By that time, a prototype of the invention falling within the claims had been fired four times, once with no needle or liquid, and three times with a needle and a syringe full of water. Two of these latter three tests were successful, but on the third attempt, the glass syringe broke:[156]-[160]. (More rigorous tests conducted soon after filing had a similarly uneven success rate: [161].) Grammond J held this was sufficient to establish demonstrated utility, given the low bar of a “scintilla of utility”: [151], [160]. Grammond J emphasized that a prototype that needs improvement and works imperfectly may nonetheless demonstrate utility: [162]. This was even though the prototype could not have been used to inject epinephrine in an emergency situation: [163]. Grammond J held that holding it to that standard, of the ultimate intended commercial application, would be to invoke the discredited promise doctrine. AstraZeneca 2017 SCC 36 has made it clear that the standard is much lower than that: “The use of the invention to inject medication other than epinephrine is not tantamount to using it ‘as a paperweight’”: [163].
2,486,935 / Auto-Injection of Medication
This post will discuss novelty, where, with respect, I feel Grammond J’s analysis went astray, as well as utility, where the decision provides a good illustration of what constitutes a “scintilla” of utility in the context of a mechanical invention. The facts are summarized here.
Novelty
Novelty requires enabling disclosure of the claimed invention in the prior art: Sanofi 2008 SCC 61 [24]-[28]. This is a two-step test, and both steps must be satisfied for the claim to be anticipated. To satisfy the first step, disclosure, “the matter relied upon as prior art must disclose subject-matter which, if performed, would necessarily result in an infringement of the patent”: Synthon [2005] UKHL 59 [22]; Sanofi [25]. At this stage “[n]o trial and error is permitted”: Sanofi [32]. Without disclosure, there is no anticipation. If the disclosure requirement is satisfied, the second stage, enablement, requires that “the ordinary skilled person would have been able to perform the invention which satisfies the requirement of disclosure”: Synthon [26]. The enablement requirement is satisfied so long as the skilled person could perform the invention without undue burden”: Synthon [29] The stages are distinct. This is important because, as the SCC noted in Sanofi [27], “While trial and error experimentation is permitted at the enablement stage, it is not at the disclosure stage.” Lord Hoffmann explained in Synthon:
[30] [T]here is a serious risk of confusion if the two requirements are not kept distinct.
For example, I have explained that for the purpose of disclosure, the prior art must
disclose an invention which, if performed, would necessarily infringe the patent. It is not
enough to say that, given the prior art, the person skilled in the art would without undue
burden be able to come up with an invention which infringed the patent. But once the
very subject-matter of the invention has been disclosed by the prior art and the question is
whether it was enabled, the person skilled in the art is assumed to be willing to make trial
and error experiments to get it to work. If, therefore, one asks whether some degree of
experimentation is to be assumed, it is very important to know whether one is talking
about disclosure or about enablement.
While Grammond J acknowledged the two-step nature of the test for enablement [106]-[109], he did not address the steps separately when it came to assessing novelty on the facts, and, with respect, he appears to have made the error that Lord Hoffmann cautioned against.
For example, with respect to claim 57, Grammond J held as follows:
[132] [The expert for Seedlings] argues that claim 57 is not anticipated, because its
distinctive element is that “the needle shield extends beyond the forward end of the
housing when the device is in its retracted storage configuration” and the needle shield of
the ‘369 patent is flush with the housing. I agree with [the expert for Pfizer], however,
that it would be within the common general knowledge of the skilled person to extend the
needle beyond the housing without undue burden. Thus, I find that claim 57 is also
anticipated.
The difficulty is that this analysis skips directly to considering undue burden, which arises only at the enablement stage, without first considering whether the claimed invention was disclosed. If the “distinctive element” of claim 57 is not present in the prior art, then it is not disclosed, because: “At this stage, there is no room for trial and error or experimentation by the skilled person. He is simply reading the prior patent for the purposes of understanding it”: Sanofi [25]. The disclosure requirement is therefore not satisfied, and consequently, the claim is not anticipated, regardless of how the enablement question is answered. Moreover, the enablement question is aimed at the same prior art that is the subject of the disclosure inquiry: the question is whether “the ordinary skilled person would have been able to perform the invention which satisfies the requirement of disclosure.” The question on enablement is whether the skilled person would have been able to perform the prior art without undue burden, not whether the skilled person would have been able to perform the claimed invention without undue burden. Grammond J appears to have run the two stages together by asking whether the claimed invention might have been derived from the prior art without undue effort, without first asking whether it was disclosed. The analysis of claims 44 and 47 [125], [127], and claims 45 and 46 [131], appears to take the same approach.
Utility
Utility is assessed at the Canadian filing date. By that time, a prototype of the invention falling within the claims had been fired four times, once with no needle or liquid, and three times with a needle and a syringe full of water. Two of these latter three tests were successful, but on the third attempt, the glass syringe broke:[156]-[160]. (More rigorous tests conducted soon after filing had a similarly uneven success rate: [161].) Grammond J held this was sufficient to establish demonstrated utility, given the low bar of a “scintilla of utility”: [151], [160]. Grammond J emphasized that a prototype that needs improvement and works imperfectly may nonetheless demonstrate utility: [162]. This was even though the prototype could not have been used to inject epinephrine in an emergency situation: [163]. Grammond J held that holding it to that standard, of the ultimate intended commercial application, would be to invoke the discredited promise doctrine. AstraZeneca 2017 SCC 36 has made it clear that the standard is much lower than that: “The use of the invention to inject medication other than epinephrine is not tantamount to using it ‘as a paperweight’”: [163].
Monday, January 20, 2020
Presumption That Inventor Intended to Claim the Invention Disclosed?
Seedlings Life Science Ventures, LLC v Pfizer Canada ULC 2020 FC 1 Grammond J
2,486,935 / Auto-Injection of Medication
Grammond J’s decision in Seedlings v Pfizer raises a number of issues, the most significant of which is the application of overbreadth to hold several claims invalid. This post provides an overview, and discusses Grammond J’s views on “blinding” the expert witnesses, and on the principle that claim construction should be approached “with a judicial anxiety to support a really useful invention.” Subsequent posts will deal with other aspects of the decision.
The invention at issue relates to an auto-injector, primarily intended for injecting epinephrine to treat anaphylaxis. The best known auto-injector is the EpiPen. The original EpiPen was on the market from late 1980s until 2009 [10]. Seedlings’ auto-injector, known as the LifeCard, was the inventor’s solution to problems with the original EpiPen, which he recognized both because of his work as a physician and as a result of his own experience of anaphylactic shock [13]-[14]. The original EpiPen was relatively bulky — a cylinder about 15 cm long and 2.5 cm in diameter — which made it inconvenient to carry. Also, the needle remained exposed after use, which is a particular concern in light of risk of transmission of blood-borne diseases [11]-[12]. The LifeCard is flat and much smaller than the original EpiPen — the size of a thick credit card — so it is more easily carried and used [63]. It also has a shield which moves forward once the injection is complete to protect the needle [19]. (See the video here.)
Pfizer’s allegedly infringing device, referred to as the NGA EpiPen (for “Next Generation Auto-Injector”), is an updated version of the original EpiPen (referred to as the “Legacy” EpiPen). Ultimately, when it came to infringement, Grammond J found that while Seedlings and Pfizer had addressed the same problem, they had come up with different solutions: the NGA EpiPen was oval, not flat [196], and the claims of the 935 patent were not to the concept of a needle shield, but rather a particular method of implementing that shield, and Seedlings’ implementation was different from Pfizer’s.
Blinding the experts
Seedlings “blinded” its experts and asked them to provide their opinion on various issues of claim construction, including the proper interpretation of some claim terms, with little knowledge of the actual dispute and without telling them which party was retaining them [41], [43]. Grammond J shared the skepticism regarding blinding expressed by Locke J 2016 FC 382 [42]–[48] (see here) and Phelan J 2019 FC 1355 [57]–[59], saying “[w]hen courts assess arguments, they focus on the validity of the reasoning, not on the credibility of the person who puts the argument forward. Thus, when assessing expert testimony, the logical character of their reasoning is much more important than the fact that some of them were blinded” [44]. With that said, one of the infringement issues was easily disposed of because Seedlings’ blinded expert had construed the term “flat” in a way that clearly supported Pfizer’s position [196].
Claim Construction
Presumption that disclosed embodiments are claimed
Grammond J noted that presumptions of interpretation are often helpful in claim construction [59]. First, he noted and applied the presumption that the inventor would have intended to claim the embodiments that are disclosed in the specification [58], [70]. “[A]n interpretation of the claims that would exclude the embodiment shown in the drawings or described in the specification is suspect, as it is unlikely to reflect the inventor’s intention,” (citing 2016 FC 580 [335]). Note that Grammond J’s application of the rule made it clear that this presumption applies to any embodiment that is disclosed in the specification, not just the preferred embodiment: see also [2009] EWHC 55 (Pat) [92].
Presumption that claims should be interpreted to preserve validity?
2,486,935 / Auto-Injection of Medication
Grammond J’s decision in Seedlings v Pfizer raises a number of issues, the most significant of which is the application of overbreadth to hold several claims invalid. This post provides an overview, and discusses Grammond J’s views on “blinding” the expert witnesses, and on the principle that claim construction should be approached “with a judicial anxiety to support a really useful invention.” Subsequent posts will deal with other aspects of the decision.
The invention at issue relates to an auto-injector, primarily intended for injecting epinephrine to treat anaphylaxis. The best known auto-injector is the EpiPen. The original EpiPen was on the market from late 1980s until 2009 [10]. Seedlings’ auto-injector, known as the LifeCard, was the inventor’s solution to problems with the original EpiPen, which he recognized both because of his work as a physician and as a result of his own experience of anaphylactic shock [13]-[14]. The original EpiPen was relatively bulky — a cylinder about 15 cm long and 2.5 cm in diameter — which made it inconvenient to carry. Also, the needle remained exposed after use, which is a particular concern in light of risk of transmission of blood-borne diseases [11]-[12]. The LifeCard is flat and much smaller than the original EpiPen — the size of a thick credit card — so it is more easily carried and used [63]. It also has a shield which moves forward once the injection is complete to protect the needle [19]. (See the video here.)
Pfizer’s allegedly infringing device, referred to as the NGA EpiPen (for “Next Generation Auto-Injector”), is an updated version of the original EpiPen (referred to as the “Legacy” EpiPen). Ultimately, when it came to infringement, Grammond J found that while Seedlings and Pfizer had addressed the same problem, they had come up with different solutions: the NGA EpiPen was oval, not flat [196], and the claims of the 935 patent were not to the concept of a needle shield, but rather a particular method of implementing that shield, and Seedlings’ implementation was different from Pfizer’s.
Blinding the experts
Seedlings “blinded” its experts and asked them to provide their opinion on various issues of claim construction, including the proper interpretation of some claim terms, with little knowledge of the actual dispute and without telling them which party was retaining them [41], [43]. Grammond J shared the skepticism regarding blinding expressed by Locke J 2016 FC 382 [42]–[48] (see here) and Phelan J 2019 FC 1355 [57]–[59], saying “[w]hen courts assess arguments, they focus on the validity of the reasoning, not on the credibility of the person who puts the argument forward. Thus, when assessing expert testimony, the logical character of their reasoning is much more important than the fact that some of them were blinded” [44]. With that said, one of the infringement issues was easily disposed of because Seedlings’ blinded expert had construed the term “flat” in a way that clearly supported Pfizer’s position [196].
Claim Construction
Presumption that disclosed embodiments are claimed
Grammond J noted that presumptions of interpretation are often helpful in claim construction [59]. First, he noted and applied the presumption that the inventor would have intended to claim the embodiments that are disclosed in the specification [58], [70]. “[A]n interpretation of the claims that would exclude the embodiment shown in the drawings or described in the specification is suspect, as it is unlikely to reflect the inventor’s intention,” (citing 2016 FC 580 [335]). Note that Grammond J’s application of the rule made it clear that this presumption applies to any embodiment that is disclosed in the specification, not just the preferred embodiment: see also [2009] EWHC 55 (Pat) [92].
Presumption that claims should be interpreted to preserve validity?
On the other hand, Grammond J rejected Seedlings’ argument that there is a presumption “that
patents should be interpreted in a way that ensures their validity” [59]. That proposition was based
on the statement by the SCC in Consolboard [1981] 1 SCR 504, 521, quoting with apparent approval
Sir George Jessel’s statement in Hinks & Son v Safety Lighting Co (1876) 4 ChD 607, that “the
patent should be approached ‘with a judicial anxiety to support a really useful invention’.”
Grammond J noted that this statement seems to be in tension with the SCC’s statement in Whirlpool
2000 SCC 67 [49a] that “[a] patent must not of course be construed with an eye on the allegedly
infringing device in respect of infringement or with an eye to the prior art in respect of validity to
avoid its effect.” Grammond J suggested that “the reference to ‘judicial anxiety’ appears to relate to
the idea that a patent should not be invalidated on a technicality,” [59] citing Burton Parsons [1976]
1 SCR 555, 563. While it is certainly true that a patent should not be invalidated on a technicality,
as Burton Parsons states, I doubt this is all that the SCC had in mind in Consolboard, where the
Court explained that “where the language of the specification, upon a reasonable view of it, can be
so read as to afford the inventor protection for that which he has actually in good faith invented, the
court, as a rule, will endeavour to give effect to that construction” (quoting with approval Western
Electric Co v Baldwin Int’l Radio [1934] SCR 570, 574). This seems to say something more than
merely disfavouring technical attacks.
I suggest that a way to reconcile Consolboard and Whirlpool is to consider Consolboard as stating
a presumption that the patentee intended to claim the inventive concept that was disclosed in the
specification. This is very similar to the presumption that the patentee intended to claim the specific
embodiments that were disclosed, except it looks to the inventive contribution, rather than the
embodiments. As the Supreme Court pointed out in Whirlpool [37] “the bargain between the
patentee and the public is in the interest of both sides only if the patent owner acquires real
protection in exchange for disclosure.” An inventor who has disclosed a new and useful invention
and who frames a claim that is too broad or otherwise invalid receives nothing in return for their
valuable disclosure. Conversely, a claim that is too narrow will be valid, but will deprive the inventor
of the bulk of his due reward: see Burton Parsons at 565. A presumption that the inventor intended
to claim the invention that they disclosed is no less consistent with Whirlpool, that is the
presumption that the inventor intended to claim the embodiments that were disclosed. It also seems
to be a realistic reflection of the inventor’s intent, and not a mere legal fiction. As Buckley LJ
pointed out in the EWCA in Catnic [1982] RPC 183, 227, “An applicant for a patent will want his
leading claim to be as wide as is possible consistently with its validity. He will wish to avoid any
unnecessary restriction of it.”
Thursday, January 16, 2020
Period for Assessing Reasonable Compensation
Western Oilfield Equipment Rentals Ltd v M-I LLC 2019 FC 1606 O'Reilly J
2,664,173 / Shaker and Degasser Combination
Previous posts have given an overview of Western Oilfield Eqpt v M-I and discussed the best mode requirement and an objection based on added mater. A final point of interest from the decision is the question of the period for assessing reasonable compensation under s 55(2) of the Act.
M-I claimed reasonable compensation under s 55(2) of the Act for acts that “would have constituted an infringement of the patent if the patent had been granted on the day the specification became open to public inspection.” There is not a great deal of case law on this provision. Prior case law has indicated that “reasonable compensation” will normally be equated to a “reasonable royalty” (see 2007 FC 358 [122]; 2010 FC 361 [337]) and that approach was also adopted in this case: [258].
A question that does not appear to have been previously considered is when the period for assessing reasonable compensation runs. In this case, the claims had changed between the date the patent was laid open and the date it was granted; in particular, it appears that the infringed claims were added during prosecution after the patentee became aware of the defendant’s system, though it appears that the defendant had been selling its system for some time previously: [14], [89]. O’Reilly J’s analysis takes it for granted that reasonable compensation would be due for the period starting when the claims were amended to encompass the defendant’s product, and not before. I take it that this was common ground between the parties, which is why O’Reilly J did not consider the point explicitly. It is not clear to me that this approach is correct.
2,664,173 / Shaker and Degasser Combination
Previous posts have given an overview of Western Oilfield Eqpt v M-I and discussed the best mode requirement and an objection based on added mater. A final point of interest from the decision is the question of the period for assessing reasonable compensation under s 55(2) of the Act.
M-I claimed reasonable compensation under s 55(2) of the Act for acts that “would have constituted an infringement of the patent if the patent had been granted on the day the specification became open to public inspection.” There is not a great deal of case law on this provision. Prior case law has indicated that “reasonable compensation” will normally be equated to a “reasonable royalty” (see 2007 FC 358 [122]; 2010 FC 361 [337]) and that approach was also adopted in this case: [258].
A question that does not appear to have been previously considered is when the period for assessing reasonable compensation runs. In this case, the claims had changed between the date the patent was laid open and the date it was granted; in particular, it appears that the infringed claims were added during prosecution after the patentee became aware of the defendant’s system, though it appears that the defendant had been selling its system for some time previously: [14], [89]. O’Reilly J’s analysis takes it for granted that reasonable compensation would be due for the period starting when the claims were amended to encompass the defendant’s product, and not before. I take it that this was common ground between the parties, which is why O’Reilly J did not consider the point explicitly. It is not clear to me that this approach is correct.
Wednesday, January 15, 2020
Added Matter Objection Considered
Western Oilfield Equipment Rentals Ltd v M-I LLC 2019 FC 1606 O'Reilly J
2,664,173 / Shaker and Degasser Combination
Previous posts have given an overview of Western Oilfield Eqpt v M-I and discussed the best mode requirement. Western Oilfeild also considered an objection based on added matter. The specification of the 173 patent was amended after the application was filed and Western argued that the amendment added new subject matter that could not reasonably be inferred from the original specification, contrary to s 38.2(2) of the Act and (then applicable) Rule 181. (Rule 181 has since been removed, presumably because it is redundant in light of 38.2(2).) O'Reilly J noted that “there is little Canadian law on the point” [238], and I must say that I am not aware of any at all. While O'Reilly J’s decision on the point largely turned on the facts, a brief discussion is warranted given the paucity of case law dealing with this provision.
O'Reilly J began by noting that:
In the first sentence of the paragraph O'Reilly J appears to be saying that the patentee’s motivation for introducing the amendments is not relevant. The second sentence is a bit confusing. As a general matter, I would have thought that whether the amendments would be reasonably inferable would be a matter of mixed fact and logic, as the question is to be answered by looking through the eyes of a skilled person. And indeed, in the subsequent analysis, O'Reilly J referred extensively to the evidence of the experts as to what could have been inferred.
As noted, O'Reilly J’s decision otherwise turned on the facts, but it is perhaps worth quoting one paragraph from the decision to illustrate the analysis.
Recall from my previous post that the invention relates to a machine called a “shale shaker,” used in the oil and gas industry to remove solids, aka “cuttings,” from the slurry that emerges from an active well, in order to separate the drilling fluid for reuse [6]. A shale shaker shakes the slurry over a screen to allow the fluid to fall through while the rock cuttings are carried away. Shaking alone does not remove all of the fluid, and the cuttings remain wet after passing through a standard shaker [33]. The invention consisted of a method and system for applying a vacuum (“pressure differential generator”) to the cuttings to recover more of the drilling fluid [35].
The prior art had disclosed a similar system using a continuous vacuum to suck fluid from the cuttings. The problem with that technique is that the continuous suction could cause cuttings to stick to the screen, clogging it and preventing fluid flow. The invention addressed this problem by varying the pressure, so that fluid would be sucked off in the high pressure intervals, and the rock cuttings would be released from the screen when the pressure dropped. This was described as “toggling” in the original claims, and “controlling air flow” in the amended claims. The point was crucial because Western’s product did not “toggle” the pressure differential, and so did not infringe claims limited to “toggling,” but it did control the air flow, and so infringed the amended claims [239]. O’Reilly J held as follows:
2,664,173 / Shaker and Degasser Combination
Previous posts have given an overview of Western Oilfield Eqpt v M-I and discussed the best mode requirement. Western Oilfeild also considered an objection based on added matter. The specification of the 173 patent was amended after the application was filed and Western argued that the amendment added new subject matter that could not reasonably be inferred from the original specification, contrary to s 38.2(2) of the Act and (then applicable) Rule 181. (Rule 181 has since been removed, presumably because it is redundant in light of 38.2(2).) O'Reilly J noted that “there is little Canadian law on the point” [238], and I must say that I am not aware of any at all. While O'Reilly J’s decision on the point largely turned on the facts, a brief discussion is warranted given the paucity of case law dealing with this provision.
O'Reilly J began by noting that:
[236] At trial, I ruled that the factual circumstances surrounding the amendments were
not relevant to this issue. It is a matter of logic, not fact, whether the amendments are
reasonably inferable.
In the first sentence of the paragraph O'Reilly J appears to be saying that the patentee’s motivation for introducing the amendments is not relevant. The second sentence is a bit confusing. As a general matter, I would have thought that whether the amendments would be reasonably inferable would be a matter of mixed fact and logic, as the question is to be answered by looking through the eyes of a skilled person. And indeed, in the subsequent analysis, O'Reilly J referred extensively to the evidence of the experts as to what could have been inferred.
As noted, O'Reilly J’s decision otherwise turned on the facts, but it is perhaps worth quoting one paragraph from the decision to illustrate the analysis.
Recall from my previous post that the invention relates to a machine called a “shale shaker,” used in the oil and gas industry to remove solids, aka “cuttings,” from the slurry that emerges from an active well, in order to separate the drilling fluid for reuse [6]. A shale shaker shakes the slurry over a screen to allow the fluid to fall through while the rock cuttings are carried away. Shaking alone does not remove all of the fluid, and the cuttings remain wet after passing through a standard shaker [33]. The invention consisted of a method and system for applying a vacuum (“pressure differential generator”) to the cuttings to recover more of the drilling fluid [35].
The prior art had disclosed a similar system using a continuous vacuum to suck fluid from the cuttings. The problem with that technique is that the continuous suction could cause cuttings to stick to the screen, clogging it and preventing fluid flow. The invention addressed this problem by varying the pressure, so that fluid would be sucked off in the high pressure intervals, and the rock cuttings would be released from the screen when the pressure dropped. This was described as “toggling” in the original claims, and “controlling air flow” in the amended claims. The point was crucial because Western’s product did not “toggle” the pressure differential, and so did not infringe claims limited to “toggling,” but it did control the air flow, and so infringed the amended claims [239]. O’Reilly J held as follows:
[251] First, while toggling was indeed an essential element of the original claims (and for
that reason, Western did not infringe them), the original specification contemplated
something broader. Paragraph 34 mentioned pulsing and toggling, but it went on to refer
to the fact that “[m]anipulating the valve by opening and/or closing the valve, at least
partially, may disrupt the flow of vapour from the sump, thereby affecting the pressure
differential.” The concept of controlling air flow, not just pulsing and toggling, is
reasonably inferable from this passage.
Tuesday, January 14, 2020
What Is a “Machine”?
Western Oilfield Equipment Rentals Ltd v M-I LLC 2019 FC 1606 O'Reilly J
2,664,173 / Shaker and Degasser Combination
A previous post described the facts and some miscellaneous legal points raised by Western Oilfield Eqpt v M-I. This post consider the best mode requirement, and in particular the question of what it means for an invention to be “a machine.”
Best Mode
O'Reilly J rejected Western’s insufficiency arguments on the basis that all of the putative defects in the disclosure were within the ability of a skilled person to address without inventive ingenuity: [141]-[144].
He also summarily rejected an attack based on failure to disclose the best mode, per s 27(3)(c), on the ground that:
That the provision relates solely to machines is well established. It is clear on the face of the provision, which applies “in the case of a machine,” and has been confirmed in a few cases: see 2009 FC 676 [328-33]; 2010 FCA 242 [72-73]; 2014 FC 844. But what is a “machine”? To my knowledge, the question did not arise in the prior cases, all of which concerned a composition of matter (to use the statutory term), namely ramipril, sildenafil and polyethylene copolymers, which are clearly not machines.
It seems clear enough that a method is not a machine, but what about a system? The mere fact that the claim uses the word “system” cannot be enough to settle the point, or it would be easy to avoid application of the provision by appropriate wording. Indeed, most claims to what would normally be considered a machine do not use that term, but rather claim eg “a vertical feed mixer.”
On the facts, Claim 19 was as follows:
It’s not entirely clear to me that this does not describe a machine. That is not to say that I disagree with O’Reilly J’s conclusion, but only that there is a puzzle. Screens and a vacuum pump are fairly ordinary components of a machine. Perhaps it is a system rather than a machine because the shaker itself is a machine, and the invention additionally comprises drilling fluid, which is not part of the shaker? While that seems reasonable enough, it is not particularly compelling, and it would desirable to have this interpretation buttressed by purposive considerations.
Turning to the Act, s 2 defines an “invention” to mean any new and useful “art, process, machine, manufacture or composition of matter.” The question then is whether the “system” at issue should be considered a “machine” rather than an “art” or perhaps a “composition of matter.” The answer does not seem clear as a matter of ordinary language. Unfortunately, purposive considerations do not help much in interpreting the provision, as there is no obvious policy for confining the best mode to machines (even though the text clearly does so). It seems this provision, introduced in the Patent Act, 1935 s 35, was modeled on the US Patent Act in effect at the time, which was similarly restricted to a machine, but the US Act has subsequently been amended to provide for a broader best mode requirement which is generally applicable. This makes it difficult to invoke purposive considerations in drawing the distinction between a “machine” and any other type of invention.
I’m inclined to think that confining the best mode requirement to machines is arbitrary. It would be better to either expand it to encompass all types of inventions, as was done in the US Act, or (preferably) eliminate it entirely. Until there is some clear purposive rationale for confining the best mode requirement to “machines,” the scope of the provision will necessarily be uncertain, and a restrictive approach to the interpretation of the provision, such as that applied by O'Reilly J, is probably the best approach, as it has the virtue of minimizing uncertainty. It would be very unfortunate if an expansive yet unclear definition of “machine” became a trap for unwary drafters.
2,664,173 / Shaker and Degasser Combination
A previous post described the facts and some miscellaneous legal points raised by Western Oilfield Eqpt v M-I. This post consider the best mode requirement, and in particular the question of what it means for an invention to be “a machine.”
Best Mode
O'Reilly J rejected Western’s insufficiency arguments on the basis that all of the putative defects in the disclosure were within the ability of a skilled person to address without inventive ingenuity: [141]-[144].
He also summarily rejected an attack based on failure to disclose the best mode, per s 27(3)(c), on the ground that:
that provision relates solely to machines and, as I understand the patent, it claims a
method and a system, not a machine [146].
That the provision relates solely to machines is well established. It is clear on the face of the provision, which applies “in the case of a machine,” and has been confirmed in a few cases: see 2009 FC 676 [328-33]; 2010 FCA 242 [72-73]; 2014 FC 844. But what is a “machine”? To my knowledge, the question did not arise in the prior cases, all of which concerned a composition of matter (to use the statutory term), namely ramipril, sildenafil and polyethylene copolymers, which are clearly not machines.
It seems clear enough that a method is not a machine, but what about a system? The mere fact that the claim uses the word “system” cannot be enough to settle the point, or it would be easy to avoid application of the provision by appropriate wording. Indeed, most claims to what would normally be considered a machine do not use that term, but rather claim eg “a vertical feed mixer.”
On the facts, Claim 19 was as follows:
19. A system comprising:
a first screen having an upper side and a lower side for separating drill cuttings
and
drilling fluid within a shaker; and
a pressure differential generator configured to pull air or vapor through the first
screen to enhance the flow of drilling fluid through the first screen with respect to
a second screen within the shaker in which the pressure differential generator does
not create a pressure differential between an area above and an area below the
second screen
It’s not entirely clear to me that this does not describe a machine. That is not to say that I disagree with O’Reilly J’s conclusion, but only that there is a puzzle. Screens and a vacuum pump are fairly ordinary components of a machine. Perhaps it is a system rather than a machine because the shaker itself is a machine, and the invention additionally comprises drilling fluid, which is not part of the shaker? While that seems reasonable enough, it is not particularly compelling, and it would desirable to have this interpretation buttressed by purposive considerations.
Turning to the Act, s 2 defines an “invention” to mean any new and useful “art, process, machine, manufacture or composition of matter.” The question then is whether the “system” at issue should be considered a “machine” rather than an “art” or perhaps a “composition of matter.” The answer does not seem clear as a matter of ordinary language. Unfortunately, purposive considerations do not help much in interpreting the provision, as there is no obvious policy for confining the best mode to machines (even though the text clearly does so). It seems this provision, introduced in the Patent Act, 1935 s 35, was modeled on the US Patent Act in effect at the time, which was similarly restricted to a machine, but the US Act has subsequently been amended to provide for a broader best mode requirement which is generally applicable. This makes it difficult to invoke purposive considerations in drawing the distinction between a “machine” and any other type of invention.
I’m inclined to think that confining the best mode requirement to machines is arbitrary. It would be better to either expand it to encompass all types of inventions, as was done in the US Act, or (preferably) eliminate it entirely. Until there is some clear purposive rationale for confining the best mode requirement to “machines,” the scope of the provision will necessarily be uncertain, and a restrictive approach to the interpretation of the provision, such as that applied by O'Reilly J, is probably the best approach, as it has the virtue of minimizing uncertainty. It would be very unfortunate if an expansive yet unclear definition of “machine” became a trap for unwary drafters.
Monday, January 13, 2020
Inducement Does Not Require Knowledge That Acts of the Third Party Amount to Infringement
Western Oilfield Equipment Rentals Ltd v M-I LLC 2019 FC 1606 O'Reilly J
2,664,173 / Shaker and Degasser Combination
In Western Oilfield Eqpt v M-I, O'Reilly J found most of the claims of M-I’s 173 patent to be valid and several to have been infringed by Western. The decision largely turned on the facts, but there are a few legal points of interest. This post will summarize the case and discuss inducing infringement, utility and obviousness, where the decision illustrates the application of established law. A subsequent post will deal with the best mode requirement, and another post will deal with added matter and the period for assessing reasonable compensation, where the decision raises more interesting legal issues.
The Invention
The invention relates to a machine called a “shale shaker,” used in the oil and gas industry to remove solids, aka “cuttings,” from the slurry that emerges from an active well, in order to separate the drilling fluid for reuse [6]. A shale shaker shakes the slurry over a screen to allow the fluid to fall through while the rock cuttings are carried away. Shaking alone does not remove all of the fluid, and the cuttings remain wet after passing through a standard shaker [33]. The invention consisted of a method and system for applying a vacuum (“pressure differential generator”) to the cuttings to recover more of the drilling fluid [35].
Claim Construction and Infringement
There were a number of contentious issues on claim construction, but these turned on the evidence and ultimately O'Reilly J construed the claims in favour of the patentee. The finding that Western infringed and induced infringement followed directly from the construction of the patent: [91]-[92]. This result is not very surprising, as it appears that the infringed claims were added during prosecution after the patentee became aware of the defendant’s system: [14], [89].
Western directly infringed the system claims [116], but did not directly infringe the method claims, which required the step of introducing slurry to the shaker [117]. M-I argued that Western induced infringement of the system claims by the drilling companies, who were the end users of the system. The established test for inducement was set out in Weatherford 2011 FCA 228 [162]. The first branch requires an act of direct infringement, and it was not disputed that the drilling companies were direct infringers [129]. The second prong requires the patentee to establish that the defendant’s influence caused the direct infringement. This is often the main hurdle, but in this case the instructions and assistance given by Western to its clients were so extensive that it was clear that this aspect of the test was satisfied [130]-[132].
The third prong of the test from Weatherford requires that “the influence must knowingly be exercised by the inducer, that is, the inducer knows that this influence will result in the completion of the act of infringement” [162]. O'Reilly J held that this branch had also been made out, noting that:
O'Reilly J’s holding on this point is consistent with the formal statement of the test in Weatherford, but there are surprisingly few cases that turn on this point. While O'Reilly J did not review the case law, his holding on this point is consistent with the view expressed by Gauthier J in her more extensive discussion of the issue in Bauer v Easton 2010 FC 361 [195]-[203]. It’s interesting to note that in US law it is now established that knowledge of the patent is needed, both for contributory infringement and for inducement: see Aro II 377 US 476, 488 (1964) regarding contributory infringement and Global–Tech Appliances, Inc v SEB SA 563 US 754, 766 (2011) regarding inducement. However, the US Supreme Court has not provided any clear rationale for its approach.
Utility
O'Reilly J rejected Western’s utility challenge. His decision raises no new points of law, but his brief discussion at [139] provides a useful summary:
Obviousness
The second step of the Windsurfing/Pozzoli framework, endorsed by the SCC in Sanofi 2008 SCC 61 [67], is to “[i]dentify the inventive concept of the claim in question or if that cannot readily be done, construe it.” In many cases identifying the inventive concept can lead to an unproductive satellite debate, and in Ciba v SNF 2017 FCA 225 the FCA (see here) stated that:
As noted by the FCA in BMS v Teva 2017 FCA 76 (see here), in Pozzoli itself, [2007] EWCA Civ 588 [19], the EWCA struck a “cautionary note” in respect to the use of the inventive concept:
The analysis of obviousness in Western Oilfield v M-I proceeded entirely in terms of the inventive concept, which allowed the claims at issue to be addressed in three categories, which reflected different inventive concepts [212]-[226]. This illustrates that there are indeed some cases in which “the inventive concept can be grasped without difficulty,” and in such cases, focusing on inventive concept can streamline the obviousness analysis.
Novelty
The anticipation attack largely failed on the facts, with O'Reilly J generally preferring the evidence of the patentee’s expert witness. However, the patentee’s own expert concluded that one item of prior art anticipated four claims, which were accordingly held to be invalid [148].
An overbreadth attack failed on the facts: [227]-[234].
2,664,173 / Shaker and Degasser Combination
In Western Oilfield Eqpt v M-I, O'Reilly J found most of the claims of M-I’s 173 patent to be valid and several to have been infringed by Western. The decision largely turned on the facts, but there are a few legal points of interest. This post will summarize the case and discuss inducing infringement, utility and obviousness, where the decision illustrates the application of established law. A subsequent post will deal with the best mode requirement, and another post will deal with added matter and the period for assessing reasonable compensation, where the decision raises more interesting legal issues.
The Invention
The invention relates to a machine called a “shale shaker,” used in the oil and gas industry to remove solids, aka “cuttings,” from the slurry that emerges from an active well, in order to separate the drilling fluid for reuse [6]. A shale shaker shakes the slurry over a screen to allow the fluid to fall through while the rock cuttings are carried away. Shaking alone does not remove all of the fluid, and the cuttings remain wet after passing through a standard shaker [33]. The invention consisted of a method and system for applying a vacuum (“pressure differential generator”) to the cuttings to recover more of the drilling fluid [35].
Claim Construction and Infringement
There were a number of contentious issues on claim construction, but these turned on the evidence and ultimately O'Reilly J construed the claims in favour of the patentee. The finding that Western infringed and induced infringement followed directly from the construction of the patent: [91]-[92]. This result is not very surprising, as it appears that the infringed claims were added during prosecution after the patentee became aware of the defendant’s system: [14], [89].
Western directly infringed the system claims [116], but did not directly infringe the method claims, which required the step of introducing slurry to the shaker [117]. M-I argued that Western induced infringement of the system claims by the drilling companies, who were the end users of the system. The established test for inducement was set out in Weatherford 2011 FCA 228 [162]. The first branch requires an act of direct infringement, and it was not disputed that the drilling companies were direct infringers [129]. The second prong requires the patentee to establish that the defendant’s influence caused the direct infringement. This is often the main hurdle, but in this case the instructions and assistance given by Western to its clients were so extensive that it was clear that this aspect of the test was satisfied [130]-[132].
The third prong of the test from Weatherford requires that “the influence must knowingly be exercised by the inducer, that is, the inducer knows that this influence will result in the completion of the act of infringement” [162]. O'Reilly J held that this branch had also been made out, noting that:
[133] Western (and its experts) has misunderstood the third branch of the test for
inducement. It does not require the alleged inducer to know that the actions of the third
party amount to infringement. That would require a legal analysis of the patent’s claims.
What is required is knowledge on the inducer’s part that the influence it wields will cause
the third party to carry out the acts that amount to infringement. In other words, the
alleged inducer simply has to know what the third party is likely to do in response to its
influence.
O'Reilly J’s holding on this point is consistent with the formal statement of the test in Weatherford, but there are surprisingly few cases that turn on this point. While O'Reilly J did not review the case law, his holding on this point is consistent with the view expressed by Gauthier J in her more extensive discussion of the issue in Bauer v Easton 2010 FC 361 [195]-[203]. It’s interesting to note that in US law it is now established that knowledge of the patent is needed, both for contributory infringement and for inducement: see Aro II 377 US 476, 488 (1964) regarding contributory infringement and Global–Tech Appliances, Inc v SEB SA 563 US 754, 766 (2011) regarding inducement. However, the US Supreme Court has not provided any clear rationale for its approach.
Utility
O'Reilly J rejected Western’s utility challenge. His decision raises no new points of law, but his brief discussion at [139] provides a useful summary:
● First, the focus must be on the claims, not on embodiments that are [described in the
specification but] not claimed;
● Second, a claim will not be found to lack utility for failure to mention a component that
a skilled person would recognize as necessary; [see also Metalliflex [1961] SCR 117];
● Third, the fact that [the inventor] did not initially arrive at a prototype that could
immediately be commercialized does not mean that his testing did not reveal a useful
invention.
Obviousness
The second step of the Windsurfing/Pozzoli framework, endorsed by the SCC in Sanofi 2008 SCC 61 [67], is to “[i]dentify the inventive concept of the claim in question or if that cannot readily be done, construe it.” In many cases identifying the inventive concept can lead to an unproductive satellite debate, and in Ciba v SNF 2017 FCA 225 the FCA (see here) stated that:
[77] There may be cases in which the inventive concept can be grasped without difficulty
but it appears to me that because “inventive concept” remains undefined, the search for it
has brought considerable confusion into the law of obviousness. That uncertainty can be
reduced by simply avoiding the inventive concept altogether and pursuing the alternate
course of construing the claim.
As noted by the FCA in BMS v Teva 2017 FCA 76 (see here), in Pozzoli itself, [2007] EWCA Civ 588 [19], the EWCA struck a “cautionary note” in respect to the use of the inventive concept:
In some cases the parties cannot agree on what the concept is. If one is not careful such a
disagreement can develop into an unnecessary satellite debate. In the end what matters
is/are the difference(s) between what is claimed and the prior art. It is those differences
which form the "step" to be considered at stage (4). So if a disagreement about the
inventive concept of a claim starts getting too involved, the sensible way to proceed is to
forget it and simply to work on the features of the claim.
The analysis of obviousness in Western Oilfield v M-I proceeded entirely in terms of the inventive concept, which allowed the claims at issue to be addressed in three categories, which reflected different inventive concepts [212]-[226]. This illustrates that there are indeed some cases in which “the inventive concept can be grasped without difficulty,” and in such cases, focusing on inventive concept can streamline the obviousness analysis.
Novelty
The anticipation attack largely failed on the facts, with O'Reilly J generally preferring the evidence of the patentee’s expert witness. However, the patentee’s own expert concluded that one item of prior art anticipated four claims, which were accordingly held to be invalid [148].
An overbreadth attack failed on the facts: [227]-[234].
Thursday, January 9, 2020
Demystifying Patent Holdup
My paper with Tom Cotter and Erik Hovenkamp, titled Demystifying Patent Holdup, 76 Wash.
& Lee L. Rev. 1501- 65 (2019), is now out and available here (and here for a direct link to the
pdf). Here's the abstract:
Patent holdup can arise when circumstances enable a patent owner to extract a larger
royalty ex post than it could have obtained in an arms length transaction ex ante. While
the concept of patent holdup is familiar to scholars and practitioners—particularly in the
context of standard-essential patent (SEP) disputes—the economic details are frequently
misunderstood. For example, the popular assumption that switching costs (those required
to switch from the infringing technology to an alternative) necessarily contribute to
holdup is false in general, and will tend to overstate the potential for extracting excessive
royalties. On the other hand, some commentaries mistakenly presume that large fixed
costs are an essential ingredient of patent holdup, which understates the scope of the
problem. In this Article, we clarify and distinguish the most basic economic factors that
contribute to patent holdup. This casts light on various points of confusion arising in
many commentaries on the subject. Path dependence—which can act to inflate the value
of a technology simply because it was adopted first—is a useful concept for
understanding the problem. In particular, patent holdup can be viewed as opportunistic
exploitation of path dependence effects serving to inflate the value of a patented
technology (relative to the alternatives) after it is adopted. This clarifies that factors
contributing to holdup are not static, but rather consist in changes in economic
circumstances over time. By breaking down the problem into its most basic parts, our
analysis provides a useful blueprint for applying patent holdup theory in complex cases.
Monday, January 6, 2020
"Patent Remedies for Complex Products" Wins IPKat Patent Book of the Year Award
I am very pleased to announce that the IPKat Blog has bestowed its 2019 Book of the Year Award on the edited volume Patent Remedies and Complex Products: Toward a Global Consensus (Brad Biddle, Jorge L. Contreras, Brian J. Love & Norman V. Siebrasse eds., Cambridge Univ. Press 2019). As well as being an editor and a member of the project steering committee, I was a co-author on the chapters on Ch 1 Reasonable Royalties; Ch 2 Lost Profits and Disgorgement; Ch 3 Enhanced Damages, Litigation Cost Recovery, and Interest; Ch 4 Injunctive Relief; Ch 5 The Effect of FRAND Commitments on Patent Remedies; and I was the sole author of Ch 7 Holdup, Holdout, and Royalty Stacking: A Review of the Literature.
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